Indian producers benefit from export boom

30 March 2005

The surge in oil prices has brought cheer to at least one section of the Indian industry. Cement majors including Gujarat Ambuja, UltraTech Cement and Saurashtra Cement are among those cashing in on the huge export potential in the Asian and Middle East region, which is witnessing an oil price-led construction boom. During February, for instance cement exports showed a healthy growth of 6.67 per cent to 0.32Mt from 0.3Mt according to data generated by the Cement Manufacturers’ Association. Much of the increase in cement exports has been on account of exports to the United Arab Emirates and other West Asian nations, industry players said.

According to them, the prices for both cement and clinker have shot up by 40-50 per cent in the global market even as domestic prices remain comparatively subdued. This has opened up huge opportunities for cement majors especially those on the west coast of the country to cater to the booming demand in the countries of the West Asian region they said. "The export prices of cement have increased to nearly US$40/t (FOB) against US$25/t six months ago, while clinker prices have risen to close to US$30/t, as against US$20/t earlier.

"The spurt in export prices provides tremendous export potential for Indian west coast-based manufacturers since the average realisation in the international markets is higher now," an industry player said. Players such as Gujarat Ambuja, which are based in Gujarat, have a big logistical advantage in shipping products to West Asia, according to industry sources. Also, the company has its own captive port, giving it a tremendous cost advantage. Gujarat Ambuja Cements, with manufacturing facilities in Gujarat is among the largest exporter of cement and the company sells about 15 per cent of its production to the export market.

UltraTech Cement, the erstwhile cement division of Larsen & Toubro that is now part of the AV Birla group is the other big exporter of clinker and cement while Saurashtra Cement is also among those planning to export in a big way.